Incident: By 2023H1, the company achieved revenue of 1,378 million yuan (+54.88%), net profit of 235 million yuan (+358.07%), minus non-attributable net profit of 149 million yuan (+204.63%); in the single Q2 quarter, it achieved revenue of 728 million yuan (+72.85%), net profit of 72 million yuan (+420.38%), net profit of 77 million yuan (+563.47%). Revenue slightly exceeded expectations, and performance met expectations.

The revenue growth rate of the four major businesses has exceeded 30%, cataracts have more than doubled, and gross margin has increased markedly.

By business, at 2023H1, the company achieved revenue of 709 million yuan (+33.37%), accounting for 51%, and a gross profit margin of 53.00% (+0.69pp). Optometry revenue was 191 million yuan (+52.87%), accounting for 14%, and gross profit margin of 45.67% (+2.91 pp). Cataract revenue was 275 million yuan (+137.04%), accounting for 20%, and a gross profit margin of 43.37% (+8.06pp), mainly due to a low base, release of backlog demand, new online cataract marketing promotion, and increased high-end surgical assessment, etc., driving high growth in the cataract business.

Comprehensive eye disease revenue was 197 million yuan (+70.71%), accounting for 14%, with a gross profit margin of 19.77% (+4.60 pp).

The company's profitability has increased dramatically, and Wushi, Lanzhou and Dongguan **** Hospitals have performed well. 2023H1. The company's net interest rate is 17.05% (+11.32pp), net interest rate of 10.81% after deducting non-attributable net interest rate (+5.30pp). The main reasons include an increase in revenue scale, cost reduction due to increased procurement and bargaining power, and a decline in cost rates due to mature chain business models. 2023H1 has a sales expense ratio of 15.77% (-2.20pp), an administrative expense ratio of 11.89% (-2.50pp), and a financial expense ratio of 2.07% (-1.29pp).

The company's profitability increased, and the net interest rates of core hospitals such as Wushi Puri, Lanzhou Puri and Dongguan **** increased significantly, to 30.93% (+3.39pp), 24.10% (+2.22pp), and 27.72% (+4.83pp), respectively.

Continue to bring in department leaders to further strengthen diagnosis and treatment capabilities. In 2023H1, the company successfully invited Professor Lu Yi, former director of ophthalmology and head of the cataract department at the Eye, Ear, Nose and Throat Hospital affiliated to Fudan University, to join Puri Ophthalmology. The two have now served as heads of the company's refractive team and cataract team respectively, promoting the construction of the company's medical team and enhancing the popularity of the company's diagnosis and treatment standards. In the future, the company will continue to attract industry leaders through remuneration, equity incentives, and partner plans to strengthen the construction of science and technology.

Profit prediction and investment rating: The company's new campus continues to climb and reverse losses, and the scale continues to expand. We maintained the company's net profit of 2.59/287/397 million yuan in 2023-2025. The PE corresponding to the current market value was 60X/54X/39X, and maintained the “buy” rating.

Risk warning: Hospital expansion or integration falls short of expectations, hospital profit growth falls short of expectations, risk of medical accidents.